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Lufthansa cancels flights due to strike

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Lufthansa cabin crew will step up their strike, canceling two thirds of its flights

Union urged cabin crew to strike for 24 hours from midnight at bases across Germany

Airline took out advertisements warning customers of the "massive impact"

Stoppages began last Friday at Frankfurt airport, then spread to Berlin and Munich Tuesday

Lufthansa cabin crew will step up their strike action on Friday, causing the cancellation of two thirds of its flights and threatening the German airline with further costly disruption.

The Independent Flight Attendants' Organisation (UFO) has urged cabin crew to strike for 24 hours from midnight on Thursday at Lufthansa bases across Germany.

The third day of industrial action comes as neither Lufthansa nor the union showed signs of backing down in their dispute over pay and working conditions.

The airline took out newspaper advertisements on Thursday warning customers of the "massive impact" on its schedule after saying it would cancel more than 1,000 flights due on Friday.

Christoph Franz, chief executive, and other board members apologised for the disruption and reiterated that they viewed the strike as "disproportionate".

"[The strike] inflicts a high financial cost on the company and harms the reputation of the Lufthansa brand," he said in the letter, urging the union to return to the negotiating table.

The union said in a statement that it regretted the escalation "but the negotiations have come to a point where there is no alternative to a strike".

Lufthansa, Europe's largest airline by revenues, plans to eliminate 3,500 posts as it aims to reduce costs by at least €1.5bn through restructuring.

High fuel costs have added to years of fierce competition from no-frills European rivals such as Ryanair as well as premium Middle East carriers.

The strike action follows 13 months of inconclusive talks over pay and comes amid union fears about the outsourcing of jobs to low-cost airlines and greater use of temporary staff.

The first stoppages began last Friday at Frankfurt airport, then spread to Berlin and Munich on Tuesday, forcing about 350 cancellations, mainly of short- and medium-haul flights.

On Friday strike action is set to affect the whole of Lufthansa's network of German airports and extend to lucrative long-haul destinations such as Los Angeles, Rio de Janeiro and Hong Kong.

Andrew Lobbenberg at HSBC told clients that the escalation of strike action would probably prompt the company "to investigate legal options, looking to challenge the proportionality of the response to the scale of the disagreement between the parties. Alternatively the escalation could force moves towards an arbitrated solution".

Peter Oppitzhauser at Cheuvreux estimated the three days of strike action would cost Lufthansa up to €29m, or about 5 per cent of the €533m consensus forecast for Lufthansa's 2012 operating profit.

However, he added: "Labour costs are basically the only cost lever that Lufthansa is able to pull so I expect the airline will continue to hold the line unless costs from the strike rise significantly."

Lufthansa made a €20m operating loss in the first half of the year, although the second quarter was profitable.

The airline has published a list of cancelled flights on its website. Passengers are being rebooked on alternative flights or offered a refund. Lufthansa subsidiaries such as Austrian Airlines, Swiss and Germanwings are unaffected.